Tag Archives: European Commission

Michael Ignatieff in Brussels ahead of Viktor Orbán

Tomorrow Viktor Orbán will have to make an appearance in the European Parliament in, as 888.hu put it, “the defense of our homeland.” In his long article Gábor Nagy recounts the indignities Orbán has suffered over the years at the hands of the European Commission. He lists all the “unfair” sanctions and infringement procedures, which, I can assure you, are numerous. Dozens of penalties have been levied against Hungary every year. And now, once again, the author continues, the homeland is under unjust fire. The Hungarian people should rest assured, however, that “Orbán is still fighting Brussels,” with the prospect of victory. Or at least that is what the grammatical construction of the sentence implies.

Even though the author envisages victory, a couple of sentences at the end of the article indicate that there is plenty of worry in Hungary over the outcome of this latest bout between Orbán and the European Commission and Parliament. The author calls attention to the fact that “right after the Wednesday EP meeting, Juncker & Co. will decide on new infringement procedures as a result of closing the Serbian-Hungarian border and the Central European University law.” Worry is also evident in a Magyar Hírlap editorial about the possible expulsion of Fidesz from the European People’s Party. It quotes all possible statements by Christian Democratic politicians in defense of Viktor Orbán and tries to calm nerves by quoting a Hungarian proverb about the porridge which is not as hot when eaten as it was while being cooked.

So far the Hungarian government is not backing down. Viktor Orbán declared that “if it’s war, let it be war,” meaning he is ready for a fight. The Orbán government found a new “star” among the Christian Democrats, István Hollik, a relatively young man who has become a forceful and extremely loyal spokesman in defense of the Fidesz-KDNP position. Practically all of his assertions are false, but he utters them with a conviction and force worthy of Szilárd Németh, except that Hollik’s demeanor and delivery are more civilized. Today in a press conference he delivered an indictment of both George Soros and the European Union. Soros, we were told, has been banned from “many countries–from the United Kingdom to Israel,” and “more than a dozen politicians in Brussels are in Soros’s pocket.” It is “an open secret, according to him” that his men are in the European Council and the European Parliament. As far as Hungary’s membership in and support from the EPP are concerned, Hollik claims to know that “the members of the European People’s Party are certain that EPP’s leaders, just as in earlier times, will not believe the mendacious allegations against Hungary and will give the country an opportunity to explain the facts and to clarify the misunderstandings.” My feeling is that this optimistic bit of news comes from the Fidesz contingent within EPP.

Well, if it depends on Michael Ignatieff, I don’t think there will be any misunderstanding in the EU about what the Hungarian government is doing as far as Central European University is concerned. Here are a couple of sentences from Ignatieff’s talk at an event organized on the issue of CEU in the European parliament, as related by The Guardian. His verdict on what the Orbán government is doing to his university is crystal clear. “It is just outrageous and these people around here need to understand how outrageous it is. This will be the first time since 1945 that a European state had actually tried to shut down a free institution that conforms to the law, that has good academic standards, operates legally…. My job is not to tell Europe what to do about it but to say: here are the stakes, this is why it matters.” Unusually frank words in the political world of the European Union. When Ignatieff was asked what Orbán hoped to achieve in persecuting CEU, he said: “You have really got to ask him. I can’t characterize what the agenda is with confidence and for me that is not the issue. I don’t care what the agenda of Mr. Orbán is, actually. My point is you don’t take an institution hostage to serve your political agenda, I don’t care what it is.” Ignatieff is, by the way, “cautiously optimistic” that the European Union will launch infringement proceedings against the Hungarian government.

Ignatieff also participated in a discussion organized by the Free University of Brussels (ULB/VUB), where the Hungarian ambassador to Brussels was present. The ambassador admitted that the European Commission might initiate an infringement procedure against Hungary on account of the CEU scandal, but “we are ready to face them and settle the disputes together.” There might, however, be a faster and more effective way to punish the Orbán government. You may recall that Ignatieff talked not only to Frans Timmermans but also to Carlos Moedas, who is in charge of research, science, and innovation. It is possible that the new law can be seen as interfering with the free flow of scientific inquiry, and therefore it might run counter to EU laws. In fact, that possibility was brought up in Frankfurter Allgemeine Sonntagszeitung. If this is the case, the EU could withdraw support for scientific research in Hungary.

Earlier, I thought there would be an easy way for the Orbán government to get out of this sticky situation. With the help of Jobbik, 64 members of parliament signed a request to the Constitutional Court to take up the case and decide on the constitutionality of the new law on higher education. The Hungarian legal community is practically unanimous in its conviction that the law is unconstitutional. Such a ruling by the court would provide cover for the government. It could drop the whole idea and thus save face and, at the same time, demonstrate to the world that, after all, Hungary is still a democratic state. Unfortunately, there is a problem of time. If President Áder had sent the amendments to the court for review, the Constitutional Court would have had to rule within 30 days. But in the case of a parliamentary petition, it might be several months before a verdict could be expected. So, in the short run this is not a workable solution.

For now, everything depends on what happens by the end of the week in Brussels.

April 25, 2017

Viktor Orbán’s latest war is turning out to be a big mistake

Yesterday I ended my post by saying that, according to the latest public opinion poll conducted by the Publicus Intézet, within a few months the number of Hungarians who think the Orbán government’s foreign policy serves Russia’s interests tripled from 9% to 26%. That is a dramatic change. Given the mood in Budapest, I assume that this trend will continue. B. György Nagy, who reported on Publicus’s findings in Vasárnapi Hírek, titled his article “They made a big mistake with the Russians.” That is, Orbán’s decision, for whatever reason, to court the Russians has backfired badly. The government media’s overtly pro-Russian and anti-Western propaganda, the government’s undisguised admiration for Vladimir Putin, the population’s ambivalent feelings concerning Paks–all these have shaken public confidence in the Orbán government itself. The war on Brussels, on George Soros, on Central European University, and on civic organizations has only compounded these problems.

The events of the last two days have increased pressure on the government. We just learned that a Russian diplomat knew ahead of time about Magomed Dasaev’s planned vigilante act. Former Prime Minister Ferenc Gyurcsány announced on Friday that there are credible grounds for Vladimir Putin’s alleged blackmail of Viktor Orbán, and today he held a press conference where he further elaborated on some of the details of the evidence he claims to have. Another demonstration against Russian interference in Hungarian affairs is going on this moment near the Russian Embassy. (The police cordoned off a large area next to the building.) The Party of the Two-tailed Dog staged a hilarious anti-government demonstration, reported on by major media outlets all over the world. On top of it all, the massive propaganda campaign against CEU and the NGOs has not shifted Hungarian public opinion. Where is the political wizardry of Viktor Orbán?

The “Stop Moscow” demonstration / Photo: Népszava / Gergő Tóth

Hungarians are not following the lead of the government when it calls them to wage war against Central European University. Although we often hear commentators claim that most people have no idea what CEU is all about, that’s not the case. According to Publicus Intézet, only 22% of Hungarians sampled hadn’t heard of the university and only 14% support the government’s plan to close it down. A sizable majority (63%) are against the government’s anti-CEU campaign.

Moreover, the overwhelming majority of Hungarians think that in a well-functioning democracy civic groups, representing the interests of the people, must exist. In fact, in the last three months the percentage of people who believe NGOs are important government watchdogs has grown from 68% to 74%. When it comes to foreign-supported NGOs engaged in political activities, the majority (57%) still support the government’s position on the issue, but three months ago their number was higher (60%). In general, 66% of Hungarians disapprove of the government’s shuttering of civic organizations.

The government is not much more successful when it comes to the campaign against George Soros. When in June 2016 people were asked whether Soros wants to topple the government, only 27% of the respondents agreed while 44% disagreed. Despite all the propaganda, Hungarians’ perception of Soros hasn’t changed much. Today 47% percent of the respondents don’t believe that Soros wants to overthrow the Orbán government and 32% thinks otherwise. The same Hungarians believe that Russia poses a greater threat to the country than the American-Hungarian financier. In November only 32% of the voters considered Russia a threat; by now it is 42%. On the other hand, the vast majority (close to 70%) have trust in the United States and the European Union. Somewhere along the way Viktor Orbán has lost his bearings.

Moving on to Brussels, today Michael Ignatieff, president of CEU, had conversations with Frans Timmermans, first deputy president of the European Commission, and Commissioner Carlos Moedas, who is responsible for research, science, and innovation. Tomorrow he will take part in an event organized by the four largest delegations in the European Parliament. On Thursday George Soros will meet with Jean-Claude Juncker and Commissioner Vĕra Jourová, who is in charge of justice, consumers, and gender equality. On Friday Soros will talk with Frans Timmermans and Jyrki Katainen, vice president and commissioner in charge of jobs, growth, investment, and competitiveness.

On Saturday the European People’s Party will hold a meeting to discuss the Hungarian situation. Manfred Weber, the leader of the EPP group, warned Viktor Orbán a few days ago that Fidesz’s membership in the EPP caucus shouldn’t be taken for granted. He emphasized that core principles such as freedom of research and teaching are not negotiable.

In addition, there will be a plenary session of the European Parliament devoted to the “CEU” law. Apparently, Orbán is planning to attend. Finally, we mustn’t forget about the serious investigation underway by the European Commission “on the state of democracy” in Hungary, where further sanctions against the Orbán-led country are expected.

I can’t help thinking that this cheap, domestically ineffectual propaganda stunt against Soros, CEU, and the NGOs was one of Viktor Orbán’s greatest mistakes, one that may eventually unravel the whole fabric of his carefully crafted political system. Whether it was inspired by Vladimir Putin, as many people suspect, or it was designed to boost the resolve of Fidesz’s core supporters ahead the election next year doesn’t really matter. It can only be described as a colossal blunder. I suspect that Orbán didn’t expect such a vehement reaction both at home and abroad.

I have no idea what Orbán’s next step will be, but for now the Soros bashing continues unabated in the government media. In fact, if anything, it has intensified. Last week the latest spokesman for Fidesz, Balázs Hidvéghi, claimed that within one year “George Soros pumped 1.2 billion forints [$4,187,172] into his agent organizations in order to build up a new oppositional body to make persistent attacks against the legitimate Hungarian government.” This is more, he added, than the amount of money parties receive from the government annually.

Perhaps there is some inner logic to Orbán’s recent wars, but from the outside they don’t make much sense.

April 24, 2017

Viktor Orbán’s regime under fire at home and abroad

It is difficult nowadays to write a post about the Hungarian political scene since it is almost impossible to predict what may happen in the next few minutes on the streets of Budapest, which are again filled with demonstrators.

One thing I have been pondering today in view of the latest U.S.-Hungarian clash over the Central European University (CEU) is the Orbán regime’s total ignorance of the workings of the U.S. government. Throughout the presidential campaign, interest in the Clinton/Trump duel was just as intense in Hungary as anywhere else in Europe. Yet day after day it was apparent that a great many journalists as well as politically engaged citizens were unfamiliar with even the most basic principles of the U.S. electoral law. I found this depressing. But when politicians who are supposed to make decisions affecting U.S.-Hungarian relations are ignorant of how U.S. diplomacy functions, we are in real trouble. And unfortunately, this is increasingly the case.

In the last three years the whole Hungarian diplomatic corps was decimated, and their places were filled with party loyalists who had no diplomatic experience. But even those who in the past 20 years were in important diplomatic positions and who are considered to be Atlantists, i.e. working for better U.S.-Hungarian relations, can come up with mind-boggling idiocies. The latest example comes from Zsolt Németh, undersecretary of the foreign ministry between 1998 and 2002 and again between 2010 and 2014. Commenting on Hoyt Brian Yee’s message to the Hungarian government, he said that Yee’s report on the U.S. government’s support for CEU is “only an opinion and in any case we are talking only about a deputy assistant secretary. Moreover, as far as I know, he has held this position for the last few years, so we ought to wait for the answer of the present American administration as to whether we can sign an agreement that would make CEU’s continued work possible.” What dilettantism and what arrogance, said Zsolt Kerner of 24.hu. The Orbán government assumed (and of course hoped) that the American response still reflected the thinking of the Obama administration. But a few hours after Németh’s comment Mark C. Toner, spokesperson of the State Department, confirmed Yee’s message. The most important sentence of Toner’s lengthy answer to a journalistic question was: “We’re urging the Government of Hungary to suspend implementation of the law.” The message cannot be clearer. The simplistic view of the Orbán government that, for Hungary, “Democratic rule is bad, Republican rule is good” was once again proved wrong. How could Viktor Orbán have forgotten his bad luck with George W. Bush after 9/11 when his insensitivity or perhaps planned insult got him into deep trouble with the Republican administration for the rest of his term?

Viktor Orbán has been a great deal more successful in his dealings with the European Union. For years he has been hoodwinking the hapless “bureaucrats.” But the “Stop Brussels” campaign and the farcical questionnaire of the so-called National Consultation helped them see the light. At last the College under the chairmanship of First Vice-President Frans Timmermans decided “to take stock of the issues at hand, in an objective, facts-based and law-based manner” concerning “the compatibility of certain actions of the Hungarian authorities with EU law and with our shared values.” Timmermans outlined the issues the European Commission and Parliament considered troubling. Heading the list was the fate of Central European University, but right after that came the announcement that “the Commission … decided that it will prepare and make public its own response to the Hungarian Government’s ‘Stop Brussels’ consultation.”

The current European Commission

Moreover, Timmermans accused Hungary of not abiding by Article 2 of the Lisbon Treaty, which reads: “The Union is founded on the values of respect for human dignity, freedom, democracy, equality, the rule of law and respect for human rights, including the rights of persons belonging to minorities. These values are common to the Member States in a society in which pluralism, non-discrimination, tolerance, justice, solidarity and equality between women and men prevail.” The sins of the Orbán government are numerous: its attack on CEU and the NGOs, lack of transparency of funding, asylum questions, disregard of human dignity and freedom, and a lack of respect for human rights, tolerance, and solidarity. Of course, we have heard all this before, but what’s different this time is that Timmermans announced that they will complete the legal assessment of the Hungarian situation as soon as possible and “the College will consider next steps on any legal concerns by the end of the month.” In the European Union, where everything takes months if not years, the Hungarian issue seems to have priority. The EU’s criticisms didn’t go unnoticed in Poland. Foreign Minister Witold Waszczykowski, in an interview with MTI, the Hungarian news agency, labeled Timmermans’ announcement “blackmail.” Péter Szijjártó called it a “pathetic accusation.”

I left to the end a development that I find extremely important. Viktor Orbán’s whole political system relies on a three-pronged parliamentary structure. Fidesz is the “center power” with two opposition groups on its flanks: Jobbik on the right and assorted smaller parties on the left, where the right and left have diametrically opposed ideologies. This was the situation in Hungary between the two world wars, which ensured the government party’s supremacy from 1920 to 1944. The genius of this arrangement is that these two poles, due to their ideological incompatibility, are unlikely to unite against the middle.

But in the CEU case Jobbik opted to join ranks with the left. In Hungary 25% of parliamentary members can demand a review of a law by the Constitutional Court, even if it has already been signed by the president. LMP decided to invoke this procedure to trigger a Court review of the new anti-CEU law. To reach the 25% threshold LMP needed to muster 50 votes. If only LMP (5), MSZP (28), and all the independents (11) were to vote for the initiative, they would come up short. But Jobbik decided to add its 24 votes. Demokratikus Koalíció (4), whose members sit with the independents, opted not to join the others because DK doesn’t consider the Fidesz-majority Constitutional Court a legitimate body. Thus, 64 members of parliament joined together in an action against Fidesz. Of course, the Jobbik spokesman emphasized that the decision was made only to save the rule of law in Hungary, and he kept repeating that this doesn’t mean an endorsement of George Soros or his university. But the fact remains that Jobbik decided to join the rest of the opposition. (At the time of the vote on the law on higher education they simply didn’t vote.) This Jobbik decision may have significant consequences.

As I write this, tens of thousands are demonstrating in Budapest, all over the city. The cause is no longer just CEU and the NGOs but democracy and a free Hungary.

April 12, 2017

The perils of being an opposition politician in Hungary

I don’t know whether I will be able to make a coherent story out of the mess the Orbán government most likely has purposefully created regarding the report of the European Commission’s European Anti-Fraud Office (OLAF) on irregularities—fraud and possible corruption—in connection with the construction of Budapest’s fourth metro line (M4). The report covered the period between 2006 and 2015.

Although the Hungarian government received the OLAF report—or its English-language summary, the Hungarian public heard about it only from the English-language news site Politico. It didn’t take long before the Fidesz government and the Fidesz-led City of Budapest, on the one hand, and the politicians of the socialist-liberal government of the pre-2010 period, on the other, were at each other’s throats. The government claimed that practically all the financial wrongdoings were committed before 2010 while the opposition politicians accused the Orbán government of making political hay out of the case while refusing to make the report public. The administration claimed that it has no authority to release OLAF’s findings.

Most likely because of the holiday season at the end of the year, for about a month not much happened. Then, on January 16, János Lázár officially announced that he will file a complaint against Gábor Demszky (SZDSZ), mayor of Budapest between 1990 and 2010, Csaba Horváth (MSZP), deputy mayor between 2006 and 2009, and János Atkári, a highly respected economist who for many years served as Gábor Demszky’s financial adviser. That announcement started an avalanche of often conflicting articles in the Hungarian media.

A day after Lázár’s announcement, his deputy Nándor Csepreghy gave a detailed press conference dealing with the Metro4 corruption case. The government found MTI’s report of that press conference so important that it was immediately translated into English. We learned from Csepreghy that the Fidesz government had had its own suspicions of fraud surrounding the project even before. The OLAF report only confirmed these suspicions.

Csepreghy disclosed a few relevant facts that might help our understanding of the case. For example, he revealed that the investigators of OLAF conducted interviews with 50 individuals, “including the competent executives and managers” of the Budapest Transit Authority (BKV) and the City of Budapest. In addition, Csepreghy named a few companies that had been involved in the construction of the metro line as possible culprits. He also gave the initials of certain individuals heading large public and private companies. Finally, he said that “there are dozens of actors mentioned in the report who were politicians, were associated with the realm of politics, or operated as semi-public actors.” Finally, he told the press that the “government’s legal advisers are currently looking into the possibility of disclosing the OLAF report to the public in its entirety, to which the Government is fully committed.”

Nándor Csepreghy at the press conference / Photo: Tamás Kovács (MTI)

Although the government filed a complaint against Demszky, Horváth, and Atkári, they weren’t among the individuals Csepreghy referred to by their initials. A Magyar Idők editorial found Demszky’s absence from the list especially regrettable. The former mayor will get off scot-free because “according to rumors, his name doesn’t appear to be in the report.” Only the CEOs of large companies will be prosecuted. But what will happen if they reveal “the name of the chief coordinator”? In brief, the journalist responsible for this editorial accuses Gábor Demszky of being the head of a conspiracy to commit fraud.

Meanwhile Hungarian members of the European Parliament decided to look into the question of whether the Hungarian government told the truth when it claimed that it needed the approval of OLAF to release the report and that it was waiting for OLAF’s response to its request. All three opposition MEPs–Csaba Molnár (DK), Benedek Jávor (Párbeszéd), and István Ujhelyi (MSZP)–asked the head of OLAF, Giovanni Kessler, about OLAF’s position. All three claimed that, according to the information they received, it was up to the Hungarian government whether to release the document or not. Since there is a controversy over the meaning of the information received, I will rely on Ujhelyi’s statement, which includes the original English-language letter he received from OLAF. Here is the crucial passage:

In response to your question, since the OLAF final report has now reached its intended recipients, the Office is not in a position to decide on the possible release of the report. Such a decision belongs in the first place to the national authorities to which the report was addressed. It is for these authorities to assess the impact of a possible release of the report and to ensure compliance with the relevant legal obligations on judicial secrecy, data protection and procedural rights, including the right of access to file.

It is hard to fathom why the Orbán government again resorted to lying instead of appealing to the possible legal problems that could stem from the release of the report. Since then, Attila Péterfalvi, president of the National Authority for Data Protection and Freedom of Information, personally asked István Tarlós, who by now has a copy of the document, not to make the OLAF report public. It looks as if Péterfalvi, before making this request, consulted with János Lázár of the Prime Minister’s Office and Péter Polt, the chief prosecutor, who are both against the release. Although there might be compelling legal reasons not to allow the publication of the OLAF report, given the reputation of Péter Polt’s prosecutor’s office one cannot help being skeptical about the real reasons for the secrecy.

Over the weekend Gábor Demszky gave an interview to Vasárnapi Hírek in which he detailed his position on the case. Demszky said that, according to the rules of the Council of Europe and the European Parliament, OLAF must give anyone mentioned in their investigative reports the opportunity to respond. Since no one contacted Demszky, Horváth or Atkári, it is probably safe to assume that they are not the subjects of the investigation. Even so, the Orbán government filed complaints against them. Demszky also said that because OLAF conducted its investigation between 2012 and 2016, “most of their information came from the offices of the Fidesz government.” OLAF, Demszky added, most likely accepted the information in good faith because its investigators don’t expect these offices to be swayed by political pressure.

I might add that one has to be very careful when assessing the veracity of witness testimony. We know from other politically motivated trials that witnesses often give false testimony. The most infamous was that of Zsolt Balogh, head of BKV. In order to save himself months of pre-trial custody, he invented the story that Miklós Hagyó (MSZP), one of the deputy mayors, demanded 40 million forints, to be delivered in a Nokia box.

The opposition parties are truly worried about the prospect of years of investigation by politically motivated Hungarian prosecutors. Even though in the past most defendants were eventually exonerated, they remained in limbo for years and their careers were ruined. We must also keep in mind that although OLAF has filed scores of such reports on cases involving fraudulent procurement practices, only four guilty verdicts have been handed down in the last almost seven years. Some cases, like that involving Orbán’s son-in-law, were unceremoniously dropped. The prosecutors’ sudden interest in this case indicates to me that they think they can use it to do damage to the opposition, one way or another. Evidence of culpability has never been the litmus test for deciding which cases to pursue.

January 30, 2017

OLAF finds irregularities–fraud and possible corruption–in the Metro-4 megaproject

So what else is new? Politico reported that the European anti-fraud office, OLAF, after looking into the financing of Budapest’s fourth metro line, found “serious irregularities—fraud and possible corruption.” OLAF recommended, because it has no authority to do anything else, that Hungary return €228 million to the European Commission and €55 million to the European Investment Bank. OLAF’s investigation covers the period between 2006 and 2015. As Politico noted, this period spans not just the two Orbán administrations “but also two Socialist-backed governments that ruled between 2004 and 2010.”

I have already written about the difficulties surrounding the building of this new metro line, so I will not recount the story here. Suffice it to say that when the line was eventually finished, it bore little resemblance to the original plans. It was only about 7 km long, running between the Kelenföld train station in South Buda and the Eastern Station on the Pest side. Originally, it was to run all the way to the outer sections of the city in Bosnyák tér, but because of financial difficulties the second part of the project was abandoned. As a result, the line is severely underutilized. And its cost was enormous. Benedek Jávor, Párbeszéd MEP, considers the project as it stands now “completely senseless.”

It is difficult to come by hard figures, but Politico puts the total cost of the project at €1.7 billion. According to the Hungarian version of Wikipedia, the cost was 450 billion forints, of which 180 billion came from the European Union and almost 170 billion from the central government. The City of Budapest contributed about 70 billion. The balance most likely came from the European Investment Bank.

As soon as the news of OLAF’s findings reached Budapest the debate began over who the guilty party is. The government’s first reaction was that it had absolutely nothing to do with the project. Everything was handled by the City of Budapest. (The City of Budapest, I would note, didn’t get a copy of the 104-page report OLAF sent to the government.) According to Lord Mayor István Tarlós’s office, as far as they know all the irregularities occurred between 2006 and 2010. So, the Gyurcsány and Bajnai governments and Gábor Demszky, former lord mayor of Budapest, are responsible for all the “irregularities” while the Orbán government is blameless. This is hard to believe.

Since the government has not released the OLAF report, we are in total darkness about the nature of these “irregularities.” I am, however, somewhat suspicious about their alleged timeline. For starters, it was only in September 2009 that the European Commission made the decision to finance the first 7-km section of Metro-4. Of course, that doesn’t preclude the possibility that fraud and corruption occurred before that date. Most likely it did. We know only too well how business is conducted in Hungary, especially when it comes to the prospect of “free money” from Brussels.

As you can see, no money was spared on the appointments

What strengthened my suspicion of the Orbán government’s culpability in this affair was an article that appeared in the government mouthpiece Magyar Idők only a few hours ago. The title of the article is telling: “Brussels wants to saddle Orbán with the affairs of Medgyessy and Demszky.” Brussels, it would seem from the headline, is pointing the finger at Orbán. Perhaps in anticipation of such a finding, the Orbán government set out to shift the blame to Medgyessy and Demszky.

Péter Medgyessy was prime minister of Hungary between 2002 and 2004. After his political career ended, he returned to his consulting business and in this capacity received 597,000 euros from the French company Alstom in 2006, the year when the final decision was made by the City of Budapest to buy Alstom cars for the new metro line. In December 2014 Alstom was found guilty of paying more than $740 million in bribes to government officials around the world.

A few months ago Hungarian authorities began an investigation into the connection between Medgyessy and Alstom. The final verdict on Medgyessy’s innocence or guilt has not yet been reached, but even if it turns out that he lobbied the Demszky administration on behalf of Alstom, for which he received money from the company, it is unlikely that OLAF considers this something for which either the Hungarian government or the City of Budapest is responsible. Unless, of course, they can prove that Medgyessy tried to bribe the officials responsible for the decision to buy Alstom cars. It seems, however, that the investigative committee set up by the Budapest City Council in September has been singularly unsuccessful in proving that any of the lobbyists tried to bribe those responsible for the decision. The final report of the committee has not been published yet, but probing questions by the right-wing media to Fidesz members of the committee have failed to unearth anything about money exchanging hands in connection with the purchase of the Alstom cars.

We can’t expect any information on the OLAF investigation from official sources for months. But, just as in the past, it can easily happen that the document will be leaked to the Hungarian media. After all, Politico is in possession of certain material already. Until then it’s a guessing game.

December 22, 2016

A new crusade in Brussels over the price of electricity

It was evident already in 2010 that the Orbán government considers the nationalization of utility companies one of its priorities. Indeed, by now almost all such companies, including, believe it or not, those of chimney sweeps, have been nationalized.

In 2013 the government, in an effort to bolster its sagging popularity, slashed retail utility rates. With this move the government killed two birds with one stone. The much-advertised cut in utility prices made the government very popular practically overnight. It also resulted in serious losses for E.ON, a German-owned gas and electricity company, and practically forced the German owners of E.ON to bail and sell the company to the Hungarian state. As it turned out, the Hungarian government paid far too much, 260 billion forints, when the assessors claimed that E.ON was actually 600 billion forints in the hole. Obviously, price was no object. Orbán wanted utility companies to be in state hands.

Once this was done, the government set about to lower prices in three stages. Critics warned that producing gas and electricity at a loss would mean that these utilities would not be able to undertake the technical innovations necessary for improved service. Once again, however, Viktor Orbán was lucky, at least in the case of natural gas. In the last couple of years the price of gas on the free market has fallen around 40%, yet the state did not lower the price it charged consumers anywhere close to that amount. Given the state’s monopoly in the energy sector and the government-regulated price structure, the profit margin of the state utility companies must be considerable. According to some estimates, Hungarian families pay about 25% more for gas today than they would if there were no fixed prices and if true market conditions existed.

Independently from all this, the European Commission is working on a so-called “winter energy package,” which is a comprehensive plan for the creation of an “energy union.” One particular provision of this proposal caught the eye of the Hungarian government: the abolition of government-set prices for electricity retailers over a five-year period. If adopted by the European Council, the body consisting of the prime ministers of the member states, Hungary will no longer be able to keep electricity prices artificially low. Hungary has among the lowest electricity rates in the EU. In Denmark consumers pay 0.309 euros per kWh, in Germany 0.297. In Hungary the price is 0.111 euros per kWh. Only in Bulgaria is electricity less expensive than it is in Hungary. The European Council is convinced that artificially low prices discourage the conservation of energy and deter investors.

electricity

So, the Orbán government decided to launch a new “war against Brussels.” Viktor Orbán announced in his Friday morning radio interview that “the government will not allow Brussels to eliminate the government’s power to set prices.” Such a move, he emphasized, would put an end to the government’s ambitious plan to lower utility prices even further in the future. He promised to defend “utility decreases,” adding that “it will be a difficult struggle but we have a chance of success” because Hungary’s position in Brussels has been greatly strengthened. Naturally, due to his outstanding political success on the world stage.

Szilárd Németh, who was chosen to be the “utility tsar” back in 2013, was given a new mission. The result? He announced that the government had found the remedy. The government will endow the Hungarian Energy and Public Utility Regulatory Authority (MEKH) with legislative powers which, in his opinion, could derail Brussels’ intentions of abolishing fixed electricity prices.

Németh outlined the terrible state of affairs during the socialist-liberal governments (2002-2010) when electricity prices went up by 97% and the price of gas tripled while inflation was only 58%. The evil foreign owners “lugged out 1,200 billion forints of profits.” But then came the Fidesz government which froze prices in 2010, and in the next two years prices rose only very little.

This is not what the author of a very thorough article remembers about the course of natural gas pricing. According to her, in 2012 one MJ of natural gas up to 1,200 m³ use was 15% more expensive than before the Orbán government came into power. Her final estimate is that if the Orbán government hadn’t touched gas prices at all, the average consumer would pay significantly less than he does today.

In discussing the evil deeds of Brussels, Németh stressed that the European Union cannot constantly ignore Hungarian sovereignty. “Hungary didn’t join the European Union to give up everything it possesses.” The decrease in utility prices is a question of sovereignty and national security. It is up to the Hungarian government to decide how it wants to help Hungarian families. Obviously, the government doesn’t want to help only those families who need assistance. Otherwise, it could offer subsidies to people whose income is insufficient to pay the full price for utilities. No, the government wants all Hungarians to be grateful that they are getting a break on their utility bills thanks to Fidesz.

The most interesting twist in Németh’s story came at the end of his press conference. He admitted that in 2013 the Hungarian parliament had extended the right of legislative powers to MEKH but that the European Union considered the decision illegal and subsequently the Hungarian government had to annul the law. So, I don’t know why the Orbán government thinks that this time around they will be more successful than they were three years ago.

All the talk about fighting Brussels on electricity prices is most likely just a political ploy. The Commission’s recommendations are just that, recommendations. The final nod comes from the European Council where Hungary is represented by Prime Minister Viktor Orbán. He can vote against the proposal.

My guess is that now that the migrant issue has lost its appeal, the government has decided to turn its attention to utility decreases which were so successful in gaining voter support before the last election. Fighting Brussels over a pocketbook issue can most likely be dragged out until 2018.

December 3, 2016

Brussels after the Hungarian referendum

Although the Hungarian media is full of the story that Antal Rogán lied about his extravagant helicopter ride to a wedding, I would rather talk about the Hungarian referendum’s reception in Brussels.

The initial reaction came from Margaritis Schinas, the first spokesman of the European Commission, who, in his October 3 press conference, tried to give the impression that the Commission takes an absolutely neutral position as far as the result of the referendum is concerned. As he put it: “If the referendum had been legally valid, we would have taken note of it; now that it is declared legally void, we also take note of it. We respect those who voted and those who didn’t vote.” A day later, in response to a question from a Hungarian journalist, the European Commission spokesman said: “The pertinent authorities declared the results of the referendum invalid. I leave it to you to draw the conclusion how this will influence the decision-making process of the European Union.”

We know that there was a sigh of relief in Brussels after the referendum failed. Martin Schulz, president of the European Parliament, indicated that Viktor Orbán’s failure to produce a valid referendum had weakened his position in any future negotiations with the officials of the European Union. As he put it, “Budapest should take it … seriously that it was not a majority and we have therefore a good chance for a dialogue.” This indicates that Viktor Orbán will most likely have a harder time in his negotiations in Brussels after the referendum fiasco.

On October 5 Jean-Claude Juncker made it clear in a speech to the European Parliament that he has no intention of lifting the quota of 1,294 refugees that Viktor Orbán himself approved already in February 2016. His remarks were interpreted by the anti-EU British Daily Express as a “brazen statement [that] is likely to cause consternation in Budapest.” Again today in Paris Juncker called on the member states to honor the decision on the distribution of refugees that was agreed upon in February. The Hungarian internet site Index seems to agree with the British paper when it predicts that Juncker’s hard-line attitude regarding compulsory quotas will only provide further ammunition for Viktor Orbán. However, Juncker’s steadfast, hard-hitting words of late don’t bode well for a friendly future encounter with the Hungarian prime minister, especially since Juncker looks upon referendums as the death knell of the European Union. Apparently, Juncker was specifically thinking of the Hungarian referendum when he talked about the problems of the European Union.

On October 6 Bertalan Havasi, head of the public relations department of the prime minister’s office, released the news that Viktor Orbán had sent a letter to Jean-Claude Juncker in which he gave details of the result, emphasizing that “3.33 million people expressed their will that without the approval of the Hungarian parliament no foreign nationals can be settled on the territory of the country” and therefore “he is initiating an amendment of the constitution.” He reassured Juncker that the proposed amendments will be in accord with European Union law as well as with Hungary’s international obligations. Copies of the letter went to Donald Tusk, Martin Schulz, and Robert Fico as the current president of the Visegrád 4 Group.

Jean Claude Juncker's door is always open Source: The Telegraph, credit AP

Jean-Claude Juncker’s door is always open / Source: The Telegraph, credit AP

At the October 3 press conference Margaritis Schinas, again in an answer to a question by a journalist, said that if Viktor Orbán would like to meet with the president of the European Union, “Mr. Juncker’s door is always open to all the heads of the member states.” Although Havasi made no mention of any such request, apparently Orbán did ask for an urgent meeting with Juncker in the same letter, as Népszabadság learned. But since Juncker already had a fixed schedule yesterday and today, “he could give Orbán only an impossible time that Orbán couldn’t accept.” As someone half-jokingly said, perhaps Juncker suggested meeting him late afternoon today, which certainly wouldn’t have suited the football-crazy Orbán who wanted to be present at the Hungarian-Swiss game held in Budapest. I suspect that the meeting between the two men will take place soon.

There is another issue in connection with the referendum. Tibor Navracsics, once one of the highest office holders in Fidesz and the Orbán government, is currently an EU commissioner. On the very day of the referendum he gave an interview to pestisracok.hu, a far-right Fidesz internet news site. In the interview he disclosed that he had voted “no” on the referendum question because in his opinion the question has nothing to do with the European Union or the European Commission. It is a national issue and therefore, despite his position as one of the commissioners, he can freely express his opinion. Index’s “Eurologus” agreed with the commissioner and quoted the European Commission’s “Code of conduct for commissioners.” Csaba Molnár, DK European Parliamentary member, thinks otherwise and asked Juncker to investigate the case. The leader of the Alliance of Socialists and Democrats of the European parliament, Gianni Pittella, agrees with Molnár that European commissioners have a duty to promote the general interest of the EU, not the interests of their own national governments.

The comments by Commissioner Navracsics on the failed referendum in Hungary calls this into question. A legal decision was taken on the resettlement of refugees, and the question in the referendum went directly against this and against the proposal coming from the EU Commission, of which Navracsics is a member. If Commissioner Navracsics does not believe in what his own Commission put forward and on the contrary thinks that national governments should not follow decisions taken by the whole of the EU, then we have a problem. If this is how he feels, then why is he working for the European Commission? Commissioner Navracsics must clarify his comments immediately.

Alexander Winterstein, deputy chief spokesman for the Commission, when asked about Navracsics’s action by euroactive.com, was evasive, claiming ignorance of the case. By today, however, it looks as if Juncker’s office is looking into the matter, asking for translations of Navracsics’s interviews and statements. Népszabadság learned that the officials of the commission find Navracsics’s public statements ambiguous, from which it is not clear whether they side with the Hungarian government or the commission on the issue of “the compulsory settlements.” Winterstein announced today that Juncker will bring the topic up at the meeting of th commissioners.

It is possible that in purely legal terms Navracsics is correct when he claims that no conflict of interest exists in this case. But one thing is sure: as euronews.com reported a day after the vote, Brussels considers Orbán’s failure to be their victory.

October 7, 2016